OTTAWA – Talk about a home equity tax is bubbling up again in Ottawa, and it’s making many Canadians uneasy. Under Prime Minister Mark Carney, the Liberal government is once more considering a tax on home equity, according to real estate experts and the Canadian Taxpayers Federation (CTF).
While government spokespeople repeatedly deny these claims, many critics say this approach would quietly target the wealth people have built in their homes to cover government spending, leaving homeowners worried about their financial futures.
With housing prices soaring and the cost of living rising, this debate is heating up. Some call it a bold step for Canada’s finances, while others see it as breaking faith with longtime homeowners.
How a Home Equity Tax Could Work
Studies that drew money from the Canada Mortgage and Housing Corporation (CMHC) outline how a home equity tax might be set up. The policy would target the value Canadians have gained in their homes over the years, which now totals trillions of dollars.
Currently, when people sell a primary home, they don’t pay any tax on the profit. Under new ideas floated, owners might pay a yearly charge or a fee when they sell, based on how much their home has gone up in value.
For example, a 2022 pitch from Generation Squeeze suggested putting a surtax on properties above $1 million, with rates tiered up to 1 percent for the most expensive homes.
This could hit areas like Toronto and Vancouver hardest, where many homes are already over that million-dollar line. Some plans would require yearly payments, while others would allow deferring the tax until the owner sells or passes the property to family.
Experts say this could cause people to avoid renovating, since boosting their home’s value might push them into the tax zone. It could also create a complicated system with high administrative costs as the government tries to keep tabs on who owes what.
Why the Liberals Are Interested in Home Equity
Money pressures are rising for the Liberals under Carney’s leadership. With the federal debt reaching $1.2 trillion and annual interest payments now higher than health funding sent to provinces, Ottawa is looking for ways to boost its revenue.
With major spending promises like the $130 billion Build Canada Homes program, finding new money is a top priority. Critics believe the Liberals’ refusal to tighten spending, and their decision not to go ahead with a capital gains tax hike, have put extra focus on ideas like the home equity tax as a way to fill budget gaps.
Supporters, including Generation Squeeze, push the idea as “generational fairness.” They argue the surtax would help slow down runaway home prices and help younger buyers who are locked out of the market. They say it could raise almost $6 billion each year, which could be put towards affordable housing.
Mark Carney has spoken about using “untapped housing equity” for economic fairness, feeding the idea that taxing home wealth is about solving the housing shortage. With Canada facing a shortfall of 3.5 million homes, this proposal is getting real attention.
Meanwhile, the CTF and real estate experts see the plan as a threat. The CTF wants all party leaders to scrap the rule (active since 2016) that requires sellers to report the sale of a primary home to the CRA. They see this as an early move toward taxing home equity.
CTF B.C. Director Carson Binda notes, “Canadians rely on their homes for retirement. After spending hundreds of thousands on studies, the government needs to promise they won’t go after what we’ve built.” The Liberals’ past interest in wealth taxes, plus Carney’s background with private investment firms, adds to suspicion that this is just a cash grab dressed up as economic justice.
The Impact on Canadian Families
For most Canadians, owning a home means more than just a place to live. It stands for years of hard work and planning—a big part of their life story. Opponents say adding a new tax on that value, especially for retirees counting on their homes for later years, goes against the promise of home ownership in Canada.
At a 2025 event for retired Canadians, Conservative leader Pierre Poilievre declared, “Your home belongs to you, and when you sell, you should keep every single penny.” The Conservatives have promised to fight any home equity tax, arguing that the Liberals are eyeing Canadians’ home values as a way to pay for careless spending.
Industry experts warn a home equity tax could rock the housing market, especially in expensive cities like Toronto and Vancouver. Homeowners could face large, sudden costs, which might force some to sell or avoid putting money into their homes. This could slow building and hurt jobs in real estate and construction. If the tax is delayed until a home is inherited, it could also put an extra load on families trying to get by, weakening the fairness the tax claims to support.
As Ottawa considers its next steps, the idea of taxing home equity is dividing people across the country. The proposal has raised real anxiety for millions. With soaring home prices, swelling government debt, and many families already feeling squeezed, the debate over a home equity tax is only likely to grow. Homeowners are watching closely to see whether their hard-earned equity will stay in their hands or become the government’s next target.
